How to Price Handmade Candles

Start with your full cost per candle, then set the price with one of two methods. CandleScience says direct sales are typically priced at three to four times cost, and wholesale at two times cost. Craftybase sets the price from a margin you pick: cost divided by one minus that margin. Both only work if your cost includes labor and overhead, and if your direct price never drops below what a shop would charge for the same candle.

What are the steps?

1. Get your full cost per candle. Materials, packaging, labor and overhead. See our cost per candle guide. CandleScience splits costs into variable (each component, plus shipping) and fixed (labor, insurance, and listing fees for online sellers).
2. Pick your margin target. CandleScience says "generally, a 25% to 50% margin is a good range for a new candle business."
3. Work out two prices. Margin method: cost / (1 - margin). Multiplier method: cost x 3 or x 4 for direct sales.
4. Work out your wholesale price. CandleScience says wholesale is typically two times cost. Craftybase calls 2x the standard multiplier.
5. Compare. Your direct price should be at or above what a shop would charge its customers, which is twice your wholesale price.
6. Check it against your market. CandleScience gives these price bands for a 7 oz (198 g) candle: mass market $8 to $15, mid-market $16 to $34, high-end $35 and up.
7. Recheck every few months. CandleScience says to update your costs every few months to account for inflation.

Worked example

All numbers are examples. Say your full cost for one candle is $7.40 (materials, packaging, labor and overhead).

Now look at what the table says. A 50 percent margin price, $14.80, is the same as your wholesale price. That is fine for wholesale. But if you sold direct at $14.80, the shop could not mark it up and make money. The 4x price, $29.60, matches the shop's retail price exactly. So at 4x cost, your site and the shop shelf agree. CandleScience's bands would put $29.60 in the mid-market range for a 7 oz candle.

Craftybase explains the markup trap. Adding 40 percent to a $7.40 cost gives 7.40 x 1.40 = $10.36. Your margin on that is (10.36 - 7.40) / 10.36 = 2.96 / 10.36, about 29 percent, not 40. Markup is figured on cost, and margin is figured on the selling price. Retailers talk in margin, so mixing them up is how prices end up too low.

Should I match my competitors?

Craftybase says not to cut prices to match competitors, and that on Etsy lower prices can signal lower quality. It also says to price for your lowest-margin channel and use that price everywhere, so customers do not feel misled. Look at your competitors to learn the price band, but build your own price from your own cost.

What about discounts and sales?

CandleScience says to factor in any periodic discounts or sales when you set prices. A simple check: if you plan a 10 percent sale on the $22.20 price, the sale price is 22.20 x 0.90 = $19.98. Your margin there is (19.98 - 7.40) / 19.98 = 12.58 / 19.98, about 63 percent. If you plan to run sales, build the room in.

Common mistakes

• Pricing from materials alone and leaving out labor and overhead.
• Calling a 40 percent markup a 40 percent margin.
• Pricing direct below the shop's retail, which pushes shops away.
• Copying a competitor's price without knowing their costs.
• Setting prices once and never checking them after supply costs move.
• Skipping fees. CandleScience counts listing fees for online sellers as a fixed cost, and our Etsy guide covers them.

Questions

Is 3x or 4x cost the right multiplier?

CandleScience gives 3 to 4 times cost for direct sales as a typical range. It is not a law. If your cost is full and your margin comes out where you want it, use the multiplier that gives it. Then test the result against what your market pays.

Should I include my time?

Yes, as labor in your cost. CandleScience counts labor as a fixed cost. See our guide on labor in candle prices.

Do I round my prices?

Rounding to a clean number is fine, as long as the margin stays where you want it. $29.60 up to $29.99 or $30 raises your margin a little.